Morgan Stanley analyst Brian Nowak is headline news this morning, thanks to a call he made to Google for Amazon's dominance of the intelligent loudspeaker market – a market that Gartner sees as having such speakers At least 70 percent of US homes will be by 2022.
Nowak believes Amazon is so smashed with its line of Echo-branded devices that Google should spend $ 3.3 billion on the "Mini." "just give it away. Version of his Google Home Smart Speaker, retail for $ 49. "One way to look at it," Nowak writes in an analyst statement that goes through his argument, "GOOGL's estimated US retail profit over the next 5 years would exceed that ~ 5x."
Amazon Echo and Google Home Speakers are the first and second most popular version of such devices currently installed in the US, where they occupy millions of homes. Another point that passes on Nowak's recommendation to Google is illustrated by new data from market research firm IHS Markit, which shows that intelligent speaker revenue will reach $ 1
It is also noteworthy that such devices are strategic games for large technology companies like Amazon, as they are springboards for customers "access to diverse information and e-commerce resources," says IHS Markit. And, of course, they are ropes that connect customers to the ecosystem of this device manufacturer.
Nowak published his recommendation for Google partly because of the threat from Amazon, he notes in his commentary. That there is an existential threat to Google's search business, in the form of "growth of voice purchases in combination with AMZN's expected installation benefits," which reduces, among other things, GOOGL's view of consumer behavior.
Thinking he could bundle the free Spokesperson with a YouTube trial account that will hopefully be turned into a paid YouTube subscription could increase YouTube revenue by 6 percent and take over the costs of Home Mini's giveaways.
For a company like $ 3.3 billion is a small price to pay Google to counter a threat from Amazon? Could be. Earlier this year, Colin Morris, director of Adobe Analytics Cloud, explained in a statement on the country's current state of affairs, which shows why Google may consider such a move to be practical: "The popularity of voice devices proves a credible first challenge be to touch as a primary interface for consumer electronics. "